News Ltd’s takeover of pay-tv company Consolidated Media Holdings looks set to proceed after the competition regulator said it would oppose any potential acquisition from Seven Group Holdings.
Although Seven did not make a bid, in June it asked the Australian Competition and Consumer Commission to look into any possible regulatory concerns that could be triggered if it moved to increase its current 24 per cent stake in ConsMedia.
In a statement today, the ACCC said any Seven acquisition of ConsMedia was likely to result in a substantial lessening of competition in the market for free-to-air-television services.
ACCC chairman Rod Sims said that Seven’s buying ConsMedia - which owns 25 per cent of Foxtel and 50 per cent of Fox Sports - would reduce other free-to-air networks’ ability to acquire sports rights.
"The ACCC is concerned that the proposed acquisition would put Seven Network in a position of advantage over other free-to-air networks in relation to joint bids and other commercial arrangements with FOX SPORTS for the acquisition of sports rights,” he said.
"Access to premium sporting content is vital to the ability of free-to-air networks to compete strongly."
The Kerry Stokes-controlled Seven Group holds about 33 per cent in Seven West Media, which runs the Seven television network, The West Australian newspapers and publisher Pacific Magazines.
In a statement, Seven said it acknowledged the ACCC’s decision and would vote in favour of News Ltd’s $2 billion takeover offer for ConsMedia.
The directors of ConsMedia, which is majority owned by James Packer’s Consolidated Press Holdings, have backed the offer.
News Ltd, the Australian arm of Rupert Murdoch’s News Corporation, has offered $3.45 a share for ConsMedia, as well as a six-cents-per share dividend.
The deal, when approved by shareholders, would mean News Ltd would own 100 per cent of Fox Sports (up from 50 per cent currently) and half of Foxtel (from 25 per cent currently).
Telstra holds the other 50 per cent stake in Foxtel.
Seven Group closed up 25 cents at $7.28, while ConsMedia was up four cents at $3.42.
News Corporation fell 37 cents to $24.19 and its non-voting scrip slipped 29 cents to $23.90.